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A New Upgrade for Nuance

This bullish call has more meat than most.

Every day, the sun rises on Wall Street and a legion of analysts wake to issue new opinions on stocks. Here at the Fool, we examine some of these picks -- and the track records of the companies behind them -- so individuals can make better investing decisions.

In addition to following professional banks, Motley Fool CAPS lets you monitor the collective opinions of more than 89,000 investors -- many of whom actually demonstrate better investing insight than the published analysts do.

In the case of Nuance Communications (Nasdaq: NUAN), CAPS investors have recently given the stock an upgrade from a four-star rank to the highest possible five stars. Here's the skinny on why our highly ranked stock pickers are getting bullish on the company today.

Since Nuance's earnings came through loud and clear with quarterly non-GAAP revenue that grew 55% -- or about 18.5% with acquisitions factored out -- investors have been more bullish on the company as it expands its reach into an increasing number of speech and imaging markets. In addition to having top-tier clients such as Dell (Nasdaq: DELL) and Hewlett-Packard (NYSE: HPQ) that include its document imaging software in their products, Nuance's embedded speech solutions are now landing in a growing number of hit consumer products from Motorola (NYSE: MOT), Samsung, and Research In Motion (Nasdaq: RIMM).

Speech recognition will be a HUGE future market, and Nuance is the 900 pound gorilla in this market. Because of the complexity and accumulated know-how, this is not a market that competitors can just hop right into. As the market develops, I could even see Nuance as an acquisition target of a Microsoft-type company.

I agree with crepps. When you have 800-pound competitors like Microsoft (Nasdaq: MSFT) and IBM (NYSE: IBM), you need clear competitive advantages -- and the benefit of a few extra pounds -- to stay alive.

To see what the very best CAPS analysts are saying now about Nuance -- as well as other winning stocks they're picking -- head on over to CAPS and have a look. The community research and resources in CAPS are totally free, unlike those analyst opinions that are reserved for only paying clients.

Fool contributor Dave Mock can marvel at the effort it must take to make a bowl of split-pea soup without liking it. He is the author of The Qualcomm Equation. The Fool's disclosure policy heaps praise on those who play by the rules.